'360-Degree' Feedback Method
May Not Be a Reliable Tool

THIS TIME OF YEAR, managers are in the midst of annual job-performance reviews. Many companies are sold on the latest fad: "360-degree" feedback. It's a dubious tool.

Under this system, employees are rated not just by their immediate boss but by peers, team members, subordinates and sometimes even customers. The idea is to get as much frank feedback from as many perspectives as possible.

A recent survey of 232 companies by William H. Mercer found that more than 65% are using the multirater system, up from about 40% in a 1995 study. But for executives who are being reviewed and who are reviewing others, the process can spark more distrust than understanding about an employee's strengths and weaknesses.

For one thing, since most 360-degree reviews are done anonymously, staff members with an ax to grind can use the system to even scores. In a veiled reference to 360-degree appraisals, the boss in one Dilbert cartoon strip announces that raises will depend on evaluations by co-workers, prompting one character to ask: "If my co-workers got small raises, wouldn't there be more available in the budget for me?"

A SENIOR VICE PRESIDENT at a New York marketing company who didn't want to be identified believes the anonymity of the reviews is "a double-edged sword. It allows people to openly share their observations about how a manager can improve," he says, "But it also allows people to vent their frustrations and anger on bosses and colleagues in an insensitive way."

He learned in a review he received a few weeks ago, that several subordinates and peers "don't think I listen to them enough," he says. That information has motivated him to slow down and take more time to talk with his direct reports. Yet he finds himself wondering who exactly voiced the most negative criticisms of him and whether his peers and bosses believe his positive leadership qualities outweigh the negatives.

The 360-degree reviews, introduced at his company two years ago, originally were designed as a development tool to advise employees how to improve their performance. Now, however, top executives are encouraging managers to share with them the feedback they receive about themselves.

"We're suddenly being asked to show our boss and the president a review that was supposed to be for our eyes only," says the senior vice president. So far, he has refused to do so, although most of his colleagues have complied with the request.

To make the process less threatening, most companies allow employees to choose which peers they want to review them. But that raises the question about how truthful friends will be. "It becomes a popularity contest -- and it lets managers off the hook from having to tell employees where they stand," argues Gerald Kraines, president and CEO of the Levinson Institute, Cambridge, Mass.

Not that the traditional performance-review system gets high marks. In almost every major survey on the subject, most employees who get annual evaluations from their bosses, and most supervisors who give them, rate the process a failure. Both groups cite an absence of frankness and a lack of thoughtfulness as two key reasons reviews usually fail to help employees grow in their jobs or to help managers better motivate subordinates.

EACH 360-DEGREE review typically enlists the opinions of eight to 12 people. It tends to generate considerable work for both employees and managers -- who may each have to review 20 or more people -- and volumes of paper.

He recalls how the president of one chemical company where Mr. Markle worked as a vice president of human resources, received a 360-degree review of his performance that was the length of a book. Each of the reviewers had numerically rated the president on 96 categories. The president, under pressure to improve results, "was supposed to use the review to come up with a plan, but instead felt overwhelmed and frustrated," says Mr. Markle.

Mr. Markle subsequently condensed the document into a page and a half.

The method seems to be most effective where employees work in teams or at a distance from their bosses. Jay Marshall, a principal of Jay Alix & Associates, a consulting company in Southfield, Mich., believes that "in professional-service firms where you have a lot of people on off-site client assignments, 360-degree reviews are the best way to see what's going on."

In his previous job as a partner at Booz Allen, where he was in charge of a team of about 75 consultants, Mr. Marshall learned through a 360-degree review that he had "become invisible" to the consultants he was overseeing. "I had gotten so focused on keeping the client happy that I wasn't spending enough time with my team," he says, "but the feedback they gave me enabled me to snap back." That feedback wouldn't have been possible from his immediate boss or other superiors at Booz Allen, who never visited his job site.

The 360-degree process, he acknowledges, requires a lot of work, but in companies whose assets are people rather than widgets, "there is a huge responsibility on the part of everyone to help each other grow."

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